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The functioning of a competition not only requires adequate organization of certain institutions like money, markets, and channels of information—some of which can never be adequately provided by private enterprise—but it depends, above all, on the existence of an appropriate legal system, a legal system designed both to preserve competition and to make it operate as beneficially as possible.
that the owner benefits from all the useful services rendered by his property and suffers for all the damages caused to others by its use.
An effective competitive system needs an intelligently designed and continuously adjusted legal framework as much as any other.
The idea of complete centralization of the direction of economic activity still appalls most people, not only because of the stupendous difficulty of the task, but even more because of the horror inspired by the idea of everything being directed from a single center.
planning and competition can be combined only by planning for competition but not by planning against competition.
The final report of this committee (which certainly cannot be accused of an undue liberal bias) arrives at the conclusion that the view according to which the greater efficiency of large-scale production is the cause of the disappearance of competition “finds scant support in any evidence that is now at hand.”
that monopoly is frequently the product of factors other than the lower costs of greater size. It is attained through collusive agreement and promoted by public policies. When these agreements are invalidated and when these policies are reversed, competitive conditions can be restored.”4
That in the United States a highly protectionist policy made a somewhat similar development possible seemed to confirm this generalization.
Far from being appropriate only to comparatively simple conditions, it is the very complexity of the division of labor under modern conditions which makes competition the only method by which such coordination can be adequately brought about.
But, once decentralization is necessary, the problem of coordination arises—a coordination which leaves the separate agencies free to adjust their activities to the facts which only they can know and yet brings about a mutual adjustment of their respective plans.
This is precisely what the price system does under competition, and which no other system even promises to accomplish.
the more obvious method of central direction is incredibly clumsy, primitive, and limited in scope.
It contends not that modern technique destroys competition but that, on the contrary, it will be impossible to make use of many of the new technological possibilities unless protection against competition is granted, i.e., a monopoly is conferred.
In instances like these it is at least possible that we might all be better off and should prefer the new situation if we had the choice—but that no individual ever gets the choice, because the alternative is either that we should all use the same cheap car
Whether such instances are of any great or lasting importance, they are certainly not instances where it could be legitimately claimed that technical progress makes central direction inevitable.
It would be more correct to say that such extreme technical excellence out of line with general conditions is evidence of a misdirection of resources.
there was little justification for them.
In our predilections and interests we are all in some measure specialists. And we all think that our personal order of values is not merely personal but that in a free discussion among rational people we would convince the others that ours is the right one.
The hopes they place in planning, however, are the result not of a comprehensive view of society but rather of a very limited view and often the result of a great exaggeration of the importance of the ends they place foremost.
The economist is the last to claim that he has the knowledge which the coordinator would need. His plea is for a method which effects such coordination without the need for an omniscient dictator. But that means precisely the retention of some such impersonal, and often unintelligible, checks on individual efforts as those against which all specialists chafe.
The common features of all collectivist systems may be described, in a phrase ever dear to socialists of all schools, as the deliberate organization of the labors of society for a definite social goal.
And it directs us at once to the point where the conflict arises between individual freedom and collectivism.
But they all differ from liberalism and individualism in wanting to organize the whole of society and all its resources for this unitary end and in refusing to recognize autonomous spheres in which the ends of the individuals are supreme.
The “social goal,” or “common purpose,” for which society is to be organized is usually vaguely described as the “common good,” the “general welfare,” or the “general interest.”
The welfare of a people, like the happiness of a man, depends on a great many things that can be provided in an infinite variety of combinations.
In our society there is neither occasion nor reason why people should develop common views about what should be done in such situations. But where all the means to be used are the property of society and are to be used in the name of society according to a unitary plan, a “social” view about what ought to be done must guide all decisions.
The essential point for us is that no such complete ethical code exists.
it would be impossible for any mind to comprehend the infinite variety of different needs of different people which compete for the available resources and to attach a definite weight to each.
Whether his interests center round his own physical needs, or whether he takes a warm interest in the welfare of every human being he knows, the ends about which he can be concerned will always be only an infinitesimal fraction of the needs of all men.
This is the fundamental fact on which the whole philosophy of individualism is based.
scales of value can exist only in individual minds, nothing but partial scales of values exist—
Common action is thus limited to the fields where people agree on common ends.
there will be almost as many views about what the government should do as there are different people.
Once the communal sector, in which the state controls all the means, exceeds a certain proportion of the whole, the effects of its actions dominate the whole system.
It is not difficult to see what must be the consequences when democracy embarks upon a course of planning which in its execution requires more agreement than in fact exists.
Agreement will in fact exist only on the mechanism to be used.
The effect of the people’s agreeing that there must be central planning, without agreeing on the ends, will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go: with the result that they may all have to make a journey which most of them do not want at all.
Majorities will be found where it is a choice between limited alternatives; but it is a superstition to believe that there must be a majority view on everything.
The delegation of particular powers to separate agencies creates a new obstacle to the achievement of a single coordinated plan.
Many separate plans do not make a planned whole—in fact, as the planners ought to be the first to admit, they may be worse than no plan.
The cry for an economic dictator is a characteristic stage in the movement toward planning.
It is important to remember that, for some time before 1933, Germany had reached a stage in which it had, in effect, had to be governed dictatorially.
Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of
many to whom, though they detested Hitler, he yet seemed the only man strong enough to get things done.
It is the price of democracy that the possibilities of conscious control are restricted to the fields where true agreement exists and that in some fields things must be left to chance. But in a society which for its functioning depends on central planning this control cannot be made dependent on a majority’s being able to agree; it will often be necessary that the will of a small minority be imposed upon the people, because this minority will be the largest group able to agree among themselves on the question at issue.
It is now often said that democracy will not tolerate “capitalism.” If “capitalism” means here a competitive system
based on free disposal over private property, it is far more important to realize that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself.
It cannot be said of democracy, as Lord Acton truly said of liberty, that it “is not a means to a higher political end. It is itself the highest political end.
Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom.
Our point, however, is not that dictatorship must inevitably extirpate freedom but rather that planning leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals and, as such, essential if central planning on a large scale is to be possible.
